1. Field
The present disclosure relates generally to data processing and financial decision systems, and more particularly, to a method and system for creating an equity exchange fund for public and private entities.
2. Description of the Related Art
When investing money, diversity of investments and security for investments are two critical factors that a sophisticated investor will look at. In today's current business environment, many investors seek financial vehicles that will allow them a blend of security, rates of return, and liquidity. Moreover, a smart investor will not want to place a substantial part of their capital in one investment vehicle, no matter what that vehicle may be. This is particularly true in the last seven years where many investments (even large cap investments) have been shown to be extremely volatile.
Yet many entrepreneurs and/or major shareholders of public and private companies have a lot of their capital tied up in a single stock, most commonly the stock of the company they are or have been associated with. It is quite common for founders/early company employees or early corporate investors to accumulate substantial amounts of stock in a single private or public company. However, by having a substantial position in a single stock, the investor/employee is devoid of a primary investment goal of diversification. Furthermore, to diversify their holdings, the investor will have to sell their position, most likely incurring capital gains, and then decide how to reinvest the proceeds to ensure diversity and security—a daunting task for most.
Therefore, a need exists for techniques for creating an exchange fund that allows investors in private and public commercial entities to diversify their holdings and reduce their overall risk. Furthermore, a need exists for an equity exchange fund to allow investors to diversify their holdings without selling their holdings and incurring capital gains.